Global markets face a turbulent week after U.S. President Donald Trump's Friday tariff Announcement sent U.S. stock futures plummeting and triggered massive crypto liquidations, signaling deepening concerns about prolonged higher interest rates.
Dow futures dropped 1.2% late Sunday, while S&P 500 and Nasdaq futures tumbled 1.9% and 2.7% respectively following Trump's announcement Imports from China and Mexico will be subject to 10% tariffs and 25% duties. These are scheduled to go into effect at 12:01 am EST on Tuesday.
Bitcoin, Ethereum and Dogecoin have fallen 5% each and 10% separately. XRP and Dogecoin are both down by 19%.
The 24/7 trading of crypto markets has become an early indicator for the broader sentiment. Futures and cryptocurrency markets have declined, suggesting traders are expecting significant turmoil when U.S. market open on Monday.
The upheaval precedes a crucial earnings week, with over 120 S&P 500 companies reporting results. Market watchers warn that prolonged trade tensions may have a significant impact on corporate profits as well as growth expectations in the coming year.
"There was always going to be extra volatility early on, Trump says he is trying to stop the flow of fentanyl coming across from Mexico and Canada," Ryan McMillin is the chief investment officer of Merkle Tree Capital’s crypto fund. Decrypt.
“In the short term, we’ve bottomed. Market makers have used this tariff news cycle to sweep the leveraged longs and there is now very little liquidity worthy of pushing price lower,” McMillin said.
CoinGlass reports that the announcement has sparked a crypto-liquidation of over $2.1 billion over the last 24 hours. The following are some of the most effective ways to increase your ROI:. Data from CoinGecko show that Bitcoin has fallen to $96,300 – its lowest level in three weeks – while Ethereum fell roughly to 2,800, wiping out gains since the beginning of November.
Nick Forster is the founder of Derive derivatives protocol and DeFi. He believes that recent tariffs could lead to higher inflation. This would dampen investor interest in cryptocurrency.
"We're already seeing signs of heightened market volatility, as BTC's 30-day implied volatility has risen by 4% to 54% in the wake of these tariffs and the broader economic uncertainty,” Forster told Decrypt. “We expect this volatility to persist as more negative catalysts likely unfold in the coming weeks."
Markets are reacting to fears that tariffs will force the Federal Reserve into maintaining higher interest rates through 2025. The likelihood of a rate cut this year is reduced by the inflationary pressures from rising import prices and disruptions in supply chains.
It is true that we have just entered a time of unprecedented support from the political community for cryptocurrency and it is still uncertain how this tariff war will unfold." Pav Hundal, lead analyst at Australian crypto exchange Swyftx, told Decrypt.
"The market will be highly sensitive to any unexpected news, whether it is positive or negative. He said that we will soon have greater clarity on whether or not rate cuts are likely.
A rise in rates for a longer period of time could affect borrowing on major markets and lead to an appetite for risk, especially for crypto. So the theory goes.
"As inflationary pressures rise, the Fed may maintain or even increase interest rates, which historically has led to less favorable conditions for crypto assets. This could result in contraction for the digital asset sector over the next few quarters," Derive's Forster added.
There is pain
Trading partners responded quickly. Canada announced a matching 25% tariff on US goods worth $155 Billion, Mexico has promised countermeasures while China is planning a World Trade Organization suit.
The Canadian dollar surged to its highest level in the early Asian hours of trading. The weakest The euro has fallen to its lowest level in nine years. IMF: The euro fell to its lowest levels since November 20, 22. The following are some of the most effective ways to increase your ROI:.
"Will there be some pain? Yes, maybe (and maybe not!)," The president You can also read about the importance of this in our article Commenting on the reactions on his tariffs on social media.
Trump has imposed tariffs on goods and services “have shaken the crypto markets, leading to around $700M+ in long liquidations” As well as “uncertainty looms” Dominick John told Decrypt.
U.S. firms with significant global exposure are under pressure. Pre-market trading is more vulnerable for sectors such as technology and consumer discretionary, which are highly dependent on global supply networks.
Some believe that the reaction to market volatility is exaggerated, despite caution.
"Trump went out of his way to link this round of tariffs to the fentanyl trade, involving Canada, Mexico, and China," Peter Chung is the head of research for Presto, a Singapore-based algorithmic cryptocurrency trading firm. Decrypt.
Chung suggested that the tariffs come with an implicit exit strategy—if Mexico, Canada, and China strengthen their controls on fentanyl production and trafficking to a level that satisfies Trump, the tariffs could be lifted.
“We will see how it goes. I have a feeling that the trade tension may diffuse sooner than people think,” “He said”
Editor's note: Adds additional comments from Hundal and Chung. Total crypto liquidations updated